Economic Development: The Battle in Florida

Editor’s note: Just after we published this morning, the House announced passage of HB 1325.

The old adage that says, “The enemy of my enemy is my friend” may get twisted every possible way today (Feb. 24) in Tallahassee.

At issue is HB 1325, legislation to establish the process by which Gov. Rick Scott’s proposed Florida Enterprise Fund would allocate money to recruit new business. Scott has made job creation the cornerstone of his governorship, touting federal labor statistics that show Florida having gained more than 1 million jobs since he was elected governor in 2010.

Gov. Rick Scott

The fund (which would replace the current Quick Action Closing Fund) would give the governor the ability to offer incentives of up to $2 million without approval of the Legislature. Scott is seeking $250 million to start the fund, and the Legislature is considering that request as part of its budget package.

On Monday (Feb. 22), the conservative action group Americans for Prosperity (backed by Koch Industries of Wichita, Kan.) began running a 30-second ad attacking the bill, dubbing it corporate welfare.

No one would accuse the fund’s most ardent backers of being liberal, and they fired back quickly.

“Yesterday, Americans for Prosperity (AFP) launched an ad to oppose the new $250 million Florida Enterprise Fund,” Enterprise Florida President Bill Johnson said in a news release. “However, Governor Scott’s proposal would support Florida’s efforts to win competitive projects with a guaranteed return on (taxpayer) investment. This fund would only invest state dollars in companies when they meet their job creation and capital investment requirements, while allowing Florida to compete with other states for major job creation projects.”

Johnson also accused the AFP’s benefactors of taking the very money they claim to disdain.

“According to recent news reports, Koch Industries (America’s second-largest privately held company), which funds AFP, has benefited from $196 million worth of incentive money from various governments. Koch Industries is willing to use taxpayer money to benefit their business, but opposing the Florida Enterprise Fund means they will not let small and growing businesses in Florida access incentive dollars. AFP should immediately suspend their campaign against the Florida Enterprise Fund . . . What’s good for the goose is good for the gander.”

Johnson had plenty of company in attacking. Among those allies was the Florida Chamber of Commerce, whose CEO describes AFP’s Florida chapter as a “regular partner” on a variety of issues. While saying the chamber wishes no taxpayer incentives were necessary to lure business to the state, chamber President Mark Wilson said:

“Until we fix our broken lawsuit abuse climate, repair our pension problems, eliminate the Assignment of Benefit scam, align education to the needs of employers, remove local regulatory barriers, and pass more targeted tax reforms, we must focus on a limited and targeted diversification strategy creating and recruiting high-wage, high-skill, high-growth industry sectors as a method to further diversify our economy.”

John Lux, chief operating officer of the Orlando-based media firm IDEAS and a long-time observer of tax-incentive policy, said Florida cannot afford to sit on the sidelines while other states offer incentives.

“We live in a global economy and there’s competition for every dollar,” Lux said. “To sit back and say ‘we have nice weather, no state income tax and beaches so we’re good’ is an outdated philosophy.

“If we want to get and keep the best companies in the best industries with the best projects we need to entice them because that’s what every other state is doing. In Florida we rightfully invest a lot of money in tourism because we have an advantage already and we don’t want other states to take what we believe is ours. We need to do the same in the business world,” Lux said.

Even as its normal allies were lining up to fight AFP, the group was finding potential strange bedfellows in Florida House Democrats. During the most recent floor debate, Democrats attacked various aspects of the bill and generally harassed the bill’s sponsor before the measure finally was rolled over to third reading.